Supply Chain Matters highlights reports that Rivian Automotive fell short of its 2022 vehicle production goal and that several top executives have departed the company, including the company’s purchasing head.
Electric vehicle start-up Rivian’s ongoing challenges for ramping up production reached a further stumbling block with the announcement that the company delivered 20,337 vehicles in 2022, falling short of this company’s highly monitored commitment to produce 25,000 vehicles. Reportedly, 10,020 vehicles were produce in the final quarter of 2022, a classic hockey-stick sign of ongoing supply chain and production challenges. The EV auto maker’s original commitment at the start of 2022 was to produce 50,000 vehicles, but that was cut at mid-year.
As Supply Chain Matters has also highlighted, highly watched Telsa missed the achieving the EV maker’s 2022 production and delivery goals.
Rivian Founder and CEO RJ Scaringe in an email to employees reportedly indicated that more than 700 vehicles were awaiting parts or work to be completed at year-end.
Executive Departures
The Wall Street Journal reported last week (Paid subscription or metered view) that several top executives including the Vice President of Interior Engineering, Randy Frank, and the Vice President of Purchasing, Steve Gawronski, had departed the company. Reportedly, both executives departed around the beginning of 2023, with Mr. Frank recruited in 2019 from Ford Motor, and Mr. Gawronski recruited in 2018 from autonomous vehicle start-up Zoox.
Previously, the company’s initial Chief Operating Officer departed at the end of 2019.
Added Background
Founded in 2009, with the vision of becoming the next iteration of producer Tesla in technologically innovative EV design, production and distribution logistics, this start-up spent its initial years in designing and developing what is today the RiT electrically powered pick-up truck, and the RiS sport utility vehicle. Both models have rather expensive base list prices, but the vehicle themselves feature a lot of technical innovation. A prior order from then equity investor Amazon for 100,000 electrically powered parcel delivery vans has also been the basis for achieving production ramp-up goals.
The company whose headquarters are in Irvine, California, utilizes a former Mitsubishi Motors automotive assembly production facility in Normal, Illinois, geared to produce upwards of 150,000 vehicles annually. In December 2021, the company announced plans to invest in a second U.S. production facility to be located east of Atlanta, Georgia. This facility reportedly will produce both batteries, vehicles and delivery vans and is estimated to employ 7,500 workers with the ability eventually employ 10,000 workers.
Thus far, the start-up has reportedly garnered upwards of 100,000 pre-orders for its vehicle line-up.
This start-up has prioritized market growth over profitability, hence the emphasis on meeting production output milestones to generate cash. The strategy comes directly out of the Tesla playbook in that auto maker’s initial growth stage, except that Tesla floundered in establishing timely volume manufacturing capability and only began global expansion plans in 2019.
In April of last year, we called reader attention to a published report from Reuters titled: CEO steers electric truck startup Rivian through supply chain twilight zone. The report was rather candid in perspective:
“Scaringe can’t get all the semiconductors Rivian needs to accelerate the assembly lines at its factory in Normal, Illinois. Chip suppliers are skeptical of the young electric vehicle company’s capability to hit promised production numbers. They are instead allocating more chips to established customers based on the numbers of vehicles they have built in the past, Scaringe said during a tour of the plant.”
Scaringe further indicated to Reuters that suppliers are holding back, wondering if Rivian was leveraging semiconductor supply needs as an excuse to cover up other production problems attributed to a lack of component supply.
Added Perspectives
In our last blog commentary related to Rivian, this Editor shared the following perspectives:
In the world of start-ups, investors expect aggressive goal setting leveraging market breakthrough technologies and compelling engineering and product features. Scale is translated to numbers, numbers of customer reservations, numbers related to vehicle performance and battery life, and numbers of media mentions.
Supply network and production volume ramp-up tend to be the purview of contract manufacturers, and indeed Foxconn and others view a promising future as EV vehicle platform design and manufacturing services providers for start-ups.
However, we submit that an important takeaway from Tesla’s continued rocky ride to being a global wide producer was not having invested early on in experienced and proven supply chain and manufacturing leaders, those that have cut their teeth and wisdom from large-scale vehicle production environments, and who fully comprehend the importance of a resilient and agile supply network strategy.
The reality of today’s existing EV automotive landscape is that there is a perception of too many players seeking to become the most dominant in product innovation and market appeal. The difference, however, is that mainstream industry stalwarts may or may have not benefitted from the case study of Tesla.
Whether this wave of Rivian’s senior executive departures is a reflection of the above is certainly a subject of speculation and conversation.
However, we submit that the notions of breakthrough product innovation meeting the realities of “design for supply chain” capabilities, especially when global supply networks cannot reliably meet component or software demand needs, is a takeaway.
Bob Ferrari
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